House Party vs. Housing Policy

Bill Pulte walked into Mar-a-Lago with a 3x5 posterboard on 11/8 to pitch the idea of federally backed 50 year mortgages to President Trump. Following standard high school posterboard rubric, Pulte included a graphic of former President Franklin Roosevelt below "30-year mortgage" and one of Trump below "50-year mortgage." His headline: "Great American Presidents."

In roughly 10 minutes, Trump had posted it to Truth Social. By 11/10, Politico was running headlines about how an insider claimed Trump had been "Sold a bill of goods."

Given the range of headlines to catch up on, if you started to read the coverage you’d find everything from how this could be an innovative affordability solution to a reckless policy disaster. But both miss the story. Policy isn't supposed to work like an out-of-control high school party - except, housing policy kind of has been lately.

There's a useful (fictitious) parallel: House Party is a classic movie about what everybody wants versus what everybody gets. A healthy dose of dated hilarity ensues. Housing policy frames the same irony on the American Dream. Except instead of hilarity, there's been excited promises and genuine chaos for years now.

Ben Hunt's 2019 Epsilon Theory series, The Long Now, calls this "Snip!" - aka the moment the tether between policy intent and policy action gets severed. Pulte's housing pitch is that in real-time.

The 50-year mortgage literally shows a Snip! in housing policy itself. The poster-boarded idea said it all: Trump looks good solving affordability. The reality, which is a lot of nuance for a poster board, is that the proposed policy pulls demand forward (buyer access to credit), props up prices at current levels (good for sellers), and keeps transaction volume healthy.

Daryl Fairweather, Redfin's chief economist, broke it down:

It's not clear how much this could lower the monthly payment because we don't know what the interest rate would look like compared to a 30 year mortgage. First, lifetime interest: A buyer would pay substantially more in interest over 50 years. How much more depends on the mortgage spread, which is a big unknown, but it could be more than double what they would pay on a traditional 30-year loan. Second, equity: Homeowners would build equity at a much slower pace. After 10 years, a buyer might have only half the equity they would have built with a 30-year mortgage.

The essential math is easy enough. On a $350k loan at 6.2%, a 30-year mortgage costs $2,144/month with $422,000 in total interest. The 50-year at the same rate? $1,894/month but $787,000 in total interest - an +86% increase. You save $250 a month. You pay $365,000 more over the life of the loan. That's before factoring in how slowly equity builds.

Fairweather again:

For home sellers, this could expand the buyer pool. But for the market as a whole, stimulating demand without increasing the number of homes for sale could simply push home prices even higher, erasing any affordability gains. The core of our affordability crisis isn't financing; it's a critical shortage of homes.

Pulte's proposal and Trump's immediate endorsement look like optics suggesting action without real solutions. Finding stimulative policies is the goal. Propping up liquidity, justifying elevated valuations - that's all the political strategists have got left. The theater of promising the best party ever has become the only game in town. And as timelines extend, in terms of 50-year mortgages, perpetual stimulus, endless deferrals, etc. - this "now" keeps feeling longer and longer.

And while I'd never suggest the House Party sequels should serve as a warning sign, there may be a real lesson in there.